Investigate Fannie and Freddie

http://www.marketwatch.com/news/story/richard-viguerie-members-congress-protected/story.aspx?guid=%7BA5627E14-470A-4111-8C68-14007CB261F8%7D&dist=hppr

If this slides by without punishment of those who set it up and conned the system, it''ll be the greatest travesty of justice in recent memory. All the evidence points to government cover-up of a failed program. And now people are screaming "more regulation!" -- They had frigging regulation in place! That's not the point!

The point is that politicians and players have gamed the programs for diverse reasons and it was protected from rational assessment and responsibility. You could create a thousand regulations with a thousand regulators, but if powerful political players protect it, then the regulations are useless.

Politically connected people have made millions off Freddie and Fannie and politicians have gained power through them. It's a shining example of government corruption and failure of social engineering and all the people who want to blame it on de-regulation and free market principles are just plain wrong

But forget about opinions, mine included. An investigation by objective sources will unveil who's to blame and what happened. If this was an oil company fiasco, Congress would be investigating around the clock. This cannot slide. It just can't.

Hopefully this is just the beginning and this cover-up will be uncovered. I predict the findings will be damning and astounding. This is something every person in the country should be paying attention to, because it goes to the heart of what's wrong with our government and how we have strayed from original intent.

Not only do we need an investigative report showing who the guilty parties are and all their associations, we need an assessment of how and why these attempts at social engineering fail and have dire consequences.

This is the greatest opportunity in a long time for the American people to wake up and clean house.

What will we do when statism fails? -- Part 1

So, what will it take to handle problems in society that we've been told are unmanagable without the benevolent state? What about the unfortunate, those who cannot help themselves and have no protectors? Would society allow them to suffer, linger and perish? No, society would not. Associations would evolve to assist those who cannot help themselves. Voluntary donations would flow to the associations most competent and efficient. There are many people in our society who possess a spiritual energy that leads to helping professions -- they have a moral sense internally generated that drives them to help the unfortunate. We all know people such as this -- they care and they act on their desire to help.

From what I saw working in the mental health profession for fifteen years, private institutions, for the most part, delivered superior service. It wasn't just the efficiency and financial management that was superior, the services were superior because talented employees were attracted to a system that was more flexible and responsive to actual needs. There wasn't that much difference in pay, and, in fact, the benefits offered by the state were superior. The private systems had two tiers (as did the state), clinical and administration -- both had to deliver excellent results in order to compete. In the private facilities I worked in, great effort was expended to keep the clinical focused on patient care while administration focused on management, marketing and finances.

The moral high ground was always accorded to state facilities because the idea was they didn't have to worry about making money, therefore they could concentrate solely on patient care. In reality, results were very different. There is a high burn-out rate in the mental health field, and in state run facilities staff that burned-out merely slowed down, hid behind paperwork and provided sub-par care while co-workers covered for them (a way of showing care for one another). In private facilities when a clinical staff member burned out, it was addressed and dealt with -- still, from a caring position, but also because it affected patient care and ultimately the business of providing that care in a competitive field.

Eventually, state guidlines and regulations of private facilities drove me from the field, because the system was handcuffed and it was becoming more difficult to provide patient care without violating some rule or regulation.

But, before the regulations became stringent, there were other big differences between private and state -- the freedom and flexibility to express our talents in a system with a mission of excellence, with no politics and no far away central control, allowed us to work as a team toward a goal we all valued. The state facilities I was familiar with never possessed this mission of excellence, although I knew some of the workers individually and they started out caring and striving to do an excellent job. The system beat them down and never allowed them the freedom and flexibility to express their talents -- it's the nature of state systems to regiment and rule the spirit out of good people.

Local associations left free to deal with the problems of the unfortunate -- those who, either temporarily or permanenetly, can't help themselves -- will surpass all government efforts to deal with the same problems. The only oversight needed is to prevent fraud and abuse. The licensing, state rules and regulations, and state inspections, otherwise, are a sham, and obstacles to good people providing excellent service.

Since here we are talking about those who can't help themselves, money will need to come from somewhere. Government programs are bloated and waste a lot of money, breeding resentment from many taxpayers that their money is used for something that's broken. This is not to say that state programs don't do some good, but on the whole it's a broken system, and has been broken for a long time. If people aren't being taxed to death they will have the money to donate to private efforts where the donors can see the results of their donations -- and judge the effectiveness.

Creative, local, private alliances will do a much better job addressing the problem and finding solutions and perhaps alleviate the overcrowding of large urbam areas where generous government programs overwhelm the system and create more problems than they solve.

Local private efforts would be judged by their results and wouldn't have the motivation to swell the rolls for more funding and agency protection. Private associations would be forced to adjust their size according to the need, and their success getting people on the road to helping themselves would determine their costs. A private association that became bloated and corrupt would quickly lose support from discerning donors through local oversight, plus the fact of a competitor offering more efficient and effective services would apply constant pressure on performance.

Local associations would also be more likely to create local alliances with businesses to help find ways to employ those who can work. The disabled who can not take care of themselves and have no family to take care of them would be more humanely treated through small, responsive, local associations than through large bureacracies.

With communities becoming more involved with the problem, creative solutions are more likely to arise as people freely choose to take responsibility and the idea of some "they" out there will take care of it is eradicated. This will stengthen community co-operation and alleviate ignorance of the sources and severity of social problems (problems of individuals in society). As people become more voluntarily involved, character is strengthened and co-ordinated efforts bring about innovative solutions. How we live together in a civilized society becomes a closer concern and responsibility is shifted to individuals rather than government control removed from local responsiveness and understanding.

When all else fails, blame the rich

The war of big ideas has devolved to pure power struggle, yet big ideas haven't disappeared, just assimilated and morphed into attitudes and prejudices. The recent political obfuscation regarding Fat Cat greed struck a populist chord from ever present strings waiting to be plucked -- the same old tune Marxists' played back in the day of vodka and dead roses.

This idea of the greedy rich is so ingrained with older workers it's an automatic response and the biggest obstacle to freedom, but it may be a fading idea that a decade or so from now will begin losing its power. The information/hi-tech age is developing a different kind of worker that's far different from the union Joe who became a Democrat to stick it to management. the new worker has highly specialized knowledge, and sometimes it's greater than management's knowledge, so that a power sharing is under way. There will still be the poor among us who hold the automatic resentment of wealth, but they will not have the traditional organization of the old worker.

As the military hierarchy of traditional companies gives way to flexible, de-centralized workplaces, there are fewer controlling managers to fight and less need for political power. Actually, the freedom of the modern workplace may translate into demands and expectations of economic and social freedom. Freer workers with more power won't have the same antagonistic relationship with management and will be less prone to envy and class warfare, therefore less dependent on government efforts of wealth redistribution.

The new worker will likely see government as clumsy, anti-tech, costly and restrictive. One can only hope.

It's time for grown-ups to take back the country: Repetition #9001

I think we can safely say that reliance on government planning and regulation has failed. Politics has become too much of a power game and the presidency has been elevated to absurd heights of gang war, causing far too much disruption in the private sector. With politicians scrambling constantly to grab power, interference in economic matters is throwing calculation off and businesses will soon not have any comfort and assurance to plan long term.

The game has to be stopped unless we want to spiral further and further into the chaos of political battles. To quote Thomas Paine, we need to avoid "the splendid extravagance of court rioting at its [industry's] expense". Paine was writing about America's genius ability to cooperate among diverse people and national backgrounds to build and achieve without the heavy control of government -- "taxis" and "kosmos" as Michael Polanyi wrote about in Two Kinds of Order. We've had enough "taxis".

We the people need to take back government from the petulant children of politics and media and limit it to its proper functions. These power-drunk yahoos are reducing principles and long term planning to daily crises which require more government control after control has caused them (see Mises), so that the spinning confusion of the markets destroys the foundation of capitalism creating a constant emergency in need of government solutions.

What we lose sight of is how much better it could be if "kosmos" had been allowed to develop years and years ago, the free market left to its ability to produce and develop cooperation. Yet, government intervention at every turn evolved into a system of political gatekeepers and engineers whose puny plans are now being realized in confusion and panic, frustration and anger. And the media "awfulizes" it gleefully, praying for the proper salvation, their chosen knight of enlightened management -- the true guidance that we've all been waiting for to rescue us from the greedy villians of capitalism. A great story once, but the plot is weak, old and pathetically tired.

It is now time for grown-ups to stand up and say enough is enough. The experiment is over and all the rules that intended fairness have backfired. The damage done isn't irreparable because we are a strong and capable nation. The interference in the financial markets is the unfortunate result of government schemes to expand home ownership by engineering lenders to loosen requirements and suspend rational, financial judgement in favor of social considerations and now the system must  cleanse itself of the damage. McCain's recent indictment of lenders and Wall Street is typical of the misguided reaction from government. People know what happened. Too many people were given loans who couldn't pay them back. Government created the relaxed environment, cajoled lenders to avoid charges of racism, made it easy to keep lending, and are now bailing them out. This is just one example of social engineering and central planning gone awry.

Of course lenders and Wall Street deserve a part of the blame, but only to the extent they have partnered with social engineers and central planners. A blanket condemnation of predatory lenders and Wall Street investors misses the target by a mile.

We are faced with fundamental problems that require fundamental solutions and all the symptomatic finagling in the world won't fix this problem. We need a restructuring of government to limit its function to protection of rights and borders and dispute resolution. This is said over and over by freedom loving people, yet no one understands the urgent need to make it happen. The grown-up producers in the country and everyone who is sick of the mess will need to demand government limits.

Only those with a vested interest in the status quo of social engineering and central planning can plead in its defense. Any man or woman who has no vested interest in the status quo will answer the question -- Can local communities and a free society manage their own individual lives through cooperation better than a relative handful of social engineers and politicians in Washington DC? -- in the affirmative. Even west coast Birkenstock liberals will agree that freedom from control is best once they have looked at the big picture. The problem of giving up power to government control is that once you do, you can no longer pick and choose your masters. The indefensible position that proper government control by the proper party is okay crumbles when the wrong gang gets control and starts passing laws that interfere with your perceived right to act otherwise. If you want freedom then you can't give government the power to take that freedom away -- it's freedom for all or freedom for none, and that's why we need limits on government power. The minority or the majority of any given ideology is at risk when power is not limited -- if the wrong gang gains unlimited power then you understand the evil.

The spontaneous order created by myriad free choices in a market economy is superior to social engineering and central control, but it scares the hell out of controllers, so government planners sell their control through fear of inequality and injustice. They have no rational basis for their argument and all their plans have failed miserably, yet, they play on class envy and fear to keep the scheme going. They also keep the scheme going by co-opting groups who then have a vested interest in the status quo. People must tear away from this crippling dependency and find the courage to live in freedom. There is no other way.

Solve Fannie and Freddie and stop the madness

We need a full investigation into the unintended consequences of Fannie Mae and Freddie Mac. This investigation needs to be run by economists who can give a full, objective report on how these government mongrels have set up a house of cards that brought out the worst in the lending and housing industry. The investigation should also include a detailed analysis of everyone involved so that the American taxpayer can learn how government is mismanaging tax dollars -- not to mention the important lessons to be learned related to economics and mixed economies.

I'm not claiming that there was any nefarious planning involved in Fannie and Freddie, but if I wanted to take over the lenders of a fictional region, I'd set up a system whereby I made an arrangement with rich and powerful backers, then make a deal with lenders to liberally lend money, no matter how risky, then use the backer's money to buy the loans from the lenders. The lenders would have a source for selling their risky loans and would soon begin taking more and more risks once they became comfortable with the arrangement. At the point they have built up the largest amount of risky debt, I would claim that I am at a  point where I can't buy the loans anymore, and that I am being taken over by my backers who will also be glad to take them over and help them out of this unfortunate situation.

Of course the government is not going to take over all lenders, but it looks like at this point they could -- they definitely have them in a position whereby they can control them more easily.

This is just to make a point -- if lenders had been responsible for the risks all along without the seemingly endless flow of risky credit being covered, they would have made more rational, frugal decisions and housing purchases wouldn't have gone wild with everyone who could fog a mirror being approved to buy a home.